Genoptix, Momenta Shares Headed for Gains

What is your favorite "sleeper" stock?

Kuruvilla: For a largely unknown sleeper, but a very interesting company, I'd name Genoptix. This is a rapidly growing and well-run company. When I was practicing medicine, I used to diagnose leukemias and lymphomas -- complicated material even for those who do it full time. Community physicians have a very difficult time with this because they may not have the volume or full-time attention.

Genoptix has an innovative model where oncologists send their samples to Genoptix where it is thoroughly tested, and physicians at Genoptix interact with the referring oncologist to explain the diagnosis. They fill a nice void in the medical system. About 7% of all leukemias and lymphomas in the U.S. are being diagnosed there, and the company could likely double that figure in the coming years. It's profitable, trades at a reasonable multiple, and has been consistently growing revenue by more than 30% annually despite the economic environment.

What is your favorite sector?

Kuruvilla: My favorite sector is definitely health care. In virtually any part of the economic cycle, skilled investors can find excellent companies with attractive risk/reward profiles.

I particularly like companies whose fortunes are not directly tied to the overall economy. Momenta is a great example of this because its future is tied to the FDA approval process, not to the health of the economy. This is exactly the type of building block that can improve the risk profile of a portfolio.

What sector would you avoid?

Kuruvilla: I would avoid the high-end consumer discretionary sector. While there will likely always be wealthy people willing to spend up, I think the recent Great Recession has produced a healthy fear for more people, which leads to more careful and measured spending. The team at PIMCO has been talking about a "new normal," which will be the wake of this recession, and I tend to agree. And if we have another leg down or can't repair our national budget deficit, that sector will only continue to suffer.

-- Reported by Gregg Greenberg in New York.

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